U.S. District Judge Joseph Goodwin ordered a 5 percent hold-back on settlements over the objections of three law firms.

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U.S. District Judge Joseph Goodwin of the Southern District of West Virginia.

A federal judge has issued an order that could result in about $550 million in common benefit fees and expenses to plaintiffs lawyers in the transvaginal mesh litigation, setting the stage for a possible fight over who gets what.

U.S. District Judge Joseph Goodwin of the Southern District of West Virginia, who is overseeing seven multidistrict litigation proceedings that at one point surpassed 100,000 lawsuits, granted a request from a fee and cost committee that defendants hold back five percent of all settlements and judgments to pay common benefit counsel. He rejected three objections from law firms including Philadelphia’s Kline & Specter, which had sought to halve that request, calling the mesh settlements “puny” in comparison to the jury verdicts.

“The court notes that this percentage results in a substantial amount of money awarded to common benefit counsel,” Goodwin wrote in his Jan. 30 order. “However, based on the numerous factors discussed above and the awards given in similar MDLs, this court believes that the award given is conservative and serves to justly compensate common benefit counsel for their work without unnecessarily burdening the plaintiffs in this litigation.”

“The court correctly notes that the most important factor in assessing such a fee request is the result obtained,” wrote Kline & Specter’s Shanin Specter, in an email. “The core of our objection is that the cases were settled for way too little and therefore the lawyers are asking for way too much. That objection was simply not addressed. Unfortunately, the court did not look at how much was obtained per claimant and whether these recoveries were good or bad, individually or generally.”

The eight lawyers on the fee committee made their request Nov. 12. They estimated that about 680,000 of the 900,000 hours that 94 law firms worked on the case was for the common benefit of everyone and sought a hold-back that would grant $366 million in common benefit fees based on the $7.25 billion in settlements so far. The final settlement price tag, though, could be closer to $11 billion, granting about $550 million in fees in the end.

Specter also found fault in lead counsel’s failure to get a global settlement, which he said was proof that that its work was not for the common benefit.

“The court strongly disagrees,” Goodwin wrote in his order. “Far from failing to provide a common benefit in the form of a global settlement, the plaintiffs’ leadership facilitated the settlement of tens of thousands of cases through its persistent efforts to weaken the defendants’ factual and legal standing compared to individual women across the country. Plaintiffs’ leadership also provided the MDL plaintiffs with all the work-product they created and educated individual plaintiff attorneys on how to prosecute a pelvic mesh case. These are global benefits.”

The judge called other arguments “premature.” Those included Specter’s claim that the fee committee hadn’t provided certain documents and that work by other firms would be uncompensated.

“K&S is essentially arguing certain slices of the pie are too small before the court has even issued its order determining the size of the pie,” he wrote. “The purpose of this court’s order is to evaluate the reasonableness of the aggregate proposed award that will be individually allocated in a later order.”

More generally, he found the fee request to be “very reasonable” given the investment of tens of millions of dollars, the complexity of the cases and, most importantly, the amount obtained. He calculated the lodestar—or the total amount billed multiplied by an average hourly rate of $400—to be less than $272 million. But the award, he wrote, was comparable to other “super-mega-fund” cases, like the $2.4 billion settlement over Actos, in which a judge assessed an 8.6 percent holdback.

Neither Aimee Wagstaff, a partner at the Lakewood, Colorado-based Andrus Wagstaff, nor Stephen Sheller of Sheller, responded to a request for comment.

Other firms did not challenge the hold-back percentage overall but have grumbled about the specific amount that the fee committee has earmarked for them—a fight that could magnify in the coming months as special master Dan Stack, a retired judge on the Madison County, Illinois, Circuit Court, reviews the fee allocation.

One of those firms is Mazie Slater Katz & Freeman, which obtained a $68 million jury verdict last year in Bergen County, New Jersey, Superior Court against C.R. Bard Inc.

“Eight law firms took two-thirds of the money, and 91 firms got the rest,” said partner Adam Slater. “We are hopeful and optimistic that Judge Stack, and, ultimately, Judge Goodwin, will apply the criteria in a fair and equitable way to fairly compensate all the law firms.”

The fee committee also got support from other law firms. Those included San Francisco’s Levin Simes Abrams; Birmingham, Alabama’s Freese & Goss; and Matthews & Associates in Houston.

Amanda Bronstad

Amanda Bronstad is the ALM staff reporter covering class actions and mass torts nationwide. She writes the email dispatch Critical Mass. She is based in Los Angeles.

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